TRADE UPDATE

Food & Agriculture
Dec. 10, 2024

By Kristy Goodfellow, Vice President of Trade and Industry Affairs and Ameya Khanapurkar, Trade Intern

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HIGHLIGHTS

  • Trump Transition: President-elect Donald Trump picked Peter Navarro to be a trade adviser in his upcoming administration.
  • Trade and Sustainability: The Global Forum on Farm Policy and Innovation (GFFPI) hosted a workshop focused on the intersection of trade policy and agricultural sustainability.
  • World Trade Organization (WTO):
    • The European Union is preparing a list of U.S. products to hit with retaliatory tariffs tied to the WTO dispute over U.S. tariffs on ripe olives from Spain.
    • A WTO dispute panel ruled Panama’s import measures addressing multiple Costa Rican agriculture products were inconsistent with WTO Sanitary and Phytosanitary articles and were more trade restrictive than necessary.
    • The WTO Goods Barometer’s latest reading was 102.7, suggesting global trade will continue to grow.
  • Farmer Sentiment: Election results have driven U.S. farmer sentiment to its highest levels since May 2021 according to the Ag Economy Barometer created by Purdue University and CME Global. The barometer also captured farmers’ export outlook given a possible trade war.
  • EU–Mercosur: On Dec. 5, the European Union reached a trade agreement with four Mercosur countries – Argentina, Brazil, Paraguay, and Uruguay.

“The stark lesson of this chapter is that America gets fleeced every day in the global marketplace both by a predatory Communist China and by an institutionally unfair and nonreciprocal WTO. Addressing these two challenges would go a long way toward restoring American greatness, both economically and militarily. Ignoring these two challenges will simply continue the parasitic draining of the American manufacturing and defense industrial base.”

———–Peter Navarro, in Project 2025’s “The Case for Fair Trade”

Trump Transition

TRADE ADVISER

  • President-elect Donald Trump has named Peter Navarro to be a senior counselor for trade and manufacturing in the upcoming administration.
  • It will be the second round of Trump administration work for Navarro, who served in several roles during Trump’s first term. Those responsibilities included deputy assistant to the president and director of the White House National Trade Council; assistant to the president and director of trade and manufacturing policy; and National Defense Production Act policy coordinator.
  • Navarro wrote a chapter in the Heritage Foundation’s Project 2025 on “The Case for Fair Trade,” in which he attacked the Most Favored Nation rule under the World Trade Organization for adding to the American trade deficit. Navarro further outlined a trade strategy that emphasized reciprocal tariffs.
  • Navarro served four months in prison for contempt of Congress after defying a congressional subpoena from the committee investigating the events of Jan. 6, 2021, at the U.S. Capitol.

Trade and Sustainability

GLOBAL FORUM ON FARM POLICY AND INNOVATION WORKSHOP

  • The Global Forum on Farm Policy and Innovation (GFFPI) hosted its second workshop focused on the intersection of trade policy and agricultural sustainability.
  • The workshop explored ways to integrate sustainability into global trade frameworks and develop standardized measurements to avoid unintended consequences.
  • A key insight was that sustainability initiatives must be practical and aligned with farmers’ goals and local conditions.
  • The participants advocated for an outcome-based, rather than a prescriptive, approach to bridge global objectives with local realities.
  • Some participants argued that “there is no automatic, inherent link between trade and agri-food sustainability” because sustainability measures greatly vary based on their context.

WTO

EUROPEAN UNION RETALIATORY TARIFFS

  • Euronews.com and several other news outlets are reporting the EU is assembling a list of U.S. products to hit with retaliatory tariffs tied to the WTO dispute over U.S. tariffs on ripe olives from Spain.
  • WTO litigation of this issue began in 2019. After a WTO panel largely found in favor of the European Union, the United States revised certain aspects of its original countervailing duty (CVD) determination but did not make any changes to Section 771B of the U.S. Tariff Act of 1930, which a WTO Dispute Panel determined to be “as such” inconsistent with the 1994 General Agreement on Tariffs and Trade and the WTO Subsidies and Countervailing Measures Agreement.
  • In February, a WTO panel found the United States failed to bring its measures into conformity with the adopted recommendations and rulings of the WTO Dispute Settlement Body. 
  • The disputed measure — Section 771B of the U.S. Tariff Act of 1930 — is the provision of U.S. law used to determine the existence and extent of indirect subsidization (i.e. “pass-through” of benefit) in CVD investigations, involving an agricultural product process from a raw agricultural product. The EU argues the measures need to be revoked to come into compliance with the WTO’s recommendations and rulings.

PANAMA IMPORTS FROM COSTA RICA

  • A WTO action ruled against restrictions on Costa Rican produce imports levied by Panama.
  • In January 2021, Costa Rica requested consultations with Panama regarding measures on the importation of several products originating in Costa Rica, including strawberries, dairy products, fresh pineapple, plantains, and bananas.
  • In January 2022, the Director-General composed the panel to address this.
  • The panel found the measures against each of these products were inconsistent with the referenced SPS articles and they were more trade-restrictive than necessary.

WTO GOODS BAROMETER

  • A new WTO indicator suggests world trade will continue to grow, but uncertainty in the global economy could result in policy shifts that would impact trade flows.
  • The latest reading of the WTO Goods Trade Barometer was 102.7, which is greater than the value of the quarterly trade volume index and suggests trade will continue to grow.
  • However, the outlook is clouded by rising economic uncertainty, including possible shifts in trade policy.
  • The Goods Trade Barometer is an indicator of world trade. Values greater than 100 are associated with above-trend trade volumes while barometer values less than 100 suggest that goods trade has either fallen below trend or will do so shortly.
Source: WTO

Farmer Sentiment

HEALTH OF THE AGRICULTURE ECONOMY

  • Election results drove U.S. farmer sentiment to its highest levels since May 2021, according to the Purdue University-CME Group Ag Economy Barometer.
    • The barometer is a collaboration between Purdue University’s Center for Commercial Agriculture and the CME Group to provide monthly nationwide measures of the health of the US agricultural economy.
  • The overall barometer, which considers multiple factors that affect the U.S. agricultural economy, rose 26% in November.
    • The November survey took place the week after the 2024 elections. Responses to the questions used to compute the Ag Economy Barometer index were nearly all more positive in November than in October.
  • The November survey also surveyed producers about the likelihood of a trade war that harms U.S. agricultural exports. Some 42% labeled the outcome as likely; Another 26% said it was unlikely, while the remaining 32% were neutral.

EU–Mercosur

EUROPEAN UNION TRADE DEAL

  • On Dec. 5, the European Union reached a trade agreement with four Mercosur countries – Argentina, Brazil, Paraguay, and Uruguay.
  • The EU is the biggest foreign investor in Mercosur with a stock of €340 billion in 2021. While the relationship is very substantial, both exporters and potential investors face barriers in Mercosur markets.
  • The deal includes commitments to stop deforestation, promote sustainable development, and protect labor rights.